Agricultural China

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Food production has been declining steadily in China, while its consumption is growing rapidly. No Chinese authorities’ measures cannot reverse this trend. This means, that China has become unprecedentedly large food importer in coming years. Unfortunately, China has not enough resources to feed its people.

In the first six months of 2004, Chinese import of agricultural products increased in 62%, and got to a record number of 14 billion dollars USD. While domestic demand is growing rapidly, the food types’ production decreased. Thus, according to official Chinese estimates, in the current year grain consumption will exceed 37, 5 million tons of its own harvest in China.

The reduction in food production made Chinese authorities worry. After all, there are most people, who remember well the terrible famine that struck the country during utopian agricultural reforms, carried out by Mao forty years ago.

Now, China is not threatened by famine, as such, because keeping the money, the country can buy food in the world market. The trouble is that the Chinese agriculture crisis can cause not only serious economic problems, but also an acute social crisis; still, more than half of population – are peasants. During past few years, Chinese government tried to remedy the situation. At the direction of President Hu Jintao, the agricultural causes’ investigation began. Also, was announced about the gradual reduction of farmers’ taxes until the abolition of all taxes. Anticipating the impact of current policies, the government predicted the grain production increasing each year, but the optimistic forecasts were never met; yields continued falling (see fig. 1).

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The government's helplessness, due to the fact that there were too much causes of agricultural degradation in China, the enormity of tasks exceeds authorities’ capabilities.

Thus, it is estimated that situation with the sowing areas is close to a disaster. Just eight main areas of China mainland (in terms of wheat harvest), were affected by extreme drought, floods and frosts. As a result, Chinese authority cannot predict the situation with wheat production of future crops.

According tothe World Development Report 2012, the Ministry of Agriculture told that about 80% of winter wheat crops could suffer, which will inevitably reduce the production. However, that is not all. In other regions of China, there were heavy rains and unprecedented frosts. Since the end of October last year, in Hebei, Jiangsu, Shanxi, Anhui, Shandong, Henan and Gansu provinces the wheat crops were under attack, because of floods. Now, the Chinese Ministry of Agriculture is trying to predict the total harvest. Given the fact that in the above-mentioned Chinese provinces produced up to 38% of the total wheat's volume in the country; it is clear, that the harvest will be quite low this year (152). These are not all problems.

Needs of local residents are not only in quantity of this product, but also in its quality. The fact is that Chinese manufacturers’ productivity growth is mainly making with genetically modified varieties and large chemicals’ number using.

The area, occupied by Chinese GM-cultures, is equal to the territory of France. In this case, the safety of GM crops for man and nature is still under the question. Moreover, there are a number of data about negative effects of trangenic crops on the environment.

Most of the arable land in China, in addition to the purely "agricultural" chemicals, polluted by discharge of industrial and municipal wastes, and manure of domestic animals, which food contains a large number of hormones. In connection to the situation, Chinese refuse from such wheat. People want to be sure what they and their children have food.

The removal of land from peasants is a key factor of the wheat harvest reducing. Owned communal land attracts attention of many industrial manufacturers, not less than the water: for plants building the space is needed. Usually, an entrepreneur agrees with the party secretary, and he forced peasants to sign a waiver of the land. As a result, farmers are paid one and half thousand dollars per family; for couple years they are eating this amount, and stay with precisely nothing.

According to Zong Shu, Chinese government statistics says, that over past five years about 80% of the total land allocated for the construction of new industrial facilities (which is 31 million square kilometers) were obtained illegally. Typically, it is the best agricultural land with decent water supply. The government has brought 160 thousand criminal cases for fraud, but it did not help to return the peasants’ land. New owners plow their land immediately, turning the outside layers of sand and clay, and digging the fertile layers; that land cannot be returned to agricultural using after such actions.

In the worst case, employers are paying several thousand dollars of fines, which is not a large sum for them; and continue their building. The extraordinarily rapid economic growth and rapid industrialization of China, require large amounts of land for factories and warehouses’ building (261).

Mass motorization in China also means an immense land acquisition for highway construction. Therefore, between 1998 and 2003, the so-called "Green Zone" decreased from ninety to seventy-six million acres in China. This immense arable land reduction repeats the yield reducing.

According to Rosen at el., in 1998, grain production in China reached its peak – 392 million tones. Only five years later, in 2003, they produced at 70 million tons of grain less. If one looks at this figure is the Chinese context, you will see how dramatic the fall is (312).

In such circumstances, import is the only way out of this situation. China is actively buying wheat in other countries.

Over past five months, the Chinese demand on Australian wheat increased sharply. Imported over 400 tones; this level has not been seen for 5 years.

The first Chinese application on Australian wheat arrived in the late August 2009. The Chinese wheat base is about 5 or 6 years old.

The wheat which is mainly sold on the domestic government auctions is Australian Standard White corn (ASW), and soft red corn (SRW U.S.), because of its high quality.

China plans to invest 95, 1 billion U.S. dollars in the agriculture of the country, in order to increase the grain production by 2015 to 25 million tons.

The investment will help farmers in developing of 26, 7 million hectares of land. According to the World Development Report 2012, it is necessary to sown at least 120, 2 million hectares of cereals to ensure the food safety. Now, tthe area under wheat crop is about 121, 9 million hectares in the country.

According to Zong Shu, in February 2012, China imported 372,262 tons of wheat. This is 3, 2 times more than the same period last year.

In March 2012, the country imported 536,262 tons of wheat, including 338,086 tons of grain from Australia, 112,750 tons from Canada, 61,334 tons from the U.S., 21,118 tons of wheat from Kazakhstan and 2,975 thousand tons from France (194).

In the struggle for survival in the harsh agricultural conditions, at the end of 2011, China spent 164 million dollars.

Chinese central government has increased financial support aimed at developing agricultural and rural areas, as well improved the lives of the peasants in order to reduce the income gap between the rich and the poor, urban and rural areas in the second largest world economies.

The central government financial support aimed at projects, related to agriculture and individual farms, are likely to exceed 1,04 trillion yuans (164 billion U.S. dollars), that is 21,3 percent more than last year.

Financial support, directed at the agricultural development, was used for the construction of agricultural irrigation and consolidation of small reservoirs.

The central government encouraged politically the financial institutions that increased businesses' lending related to agriculture.

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The local government financial departments have implemented peasants' subsidy programs, and measures aimed at increasing farmers' incomes, such as minimum purchase prices' setting for wheat and rice.

At the same time, about 227 billion yuans were aimed to help poor farmers.

In order to accelerate the poverty reduction, China has introduced new standards for determining the poverty line, which rose to 2,300 yuans (362 U.S. dollars) of next year income for peasants; it is more than 80 percent, compared to 1274 yuans in 2010.

This poverty threshold's significant increase approximating Chinese poverty standard to the international standard of 1, 25 U.S. dollar per day, established by the World Bank in 2008.

According to Zhang, and Alon, in 2011 – 2012, the grain harvest's gross in the country amounted to 571, 2 million tons. One of the biggest Chinese companies, Kangton Industry, Inc., has bought the most part of grain to their country. It is about 399, 15 million tones. Their coordinates: China, Shanghai 200086, Rm 1201, Hometex Mansion, ? 210 Siping Road; Tel: 86 21 555151611 (27).

For reference: 1 dollar = 148,11 tenge, 1 yuan = 23,37 tenge, the yuan is weaker than the dollar (6.33 yuan = 1 dollar), but stronger against the tenge. How this value rating reflects on the country’s economic? For example, when China is exporting some goods, it may be rice – one of the best Chinese products, the growth of the middle class has income.

Despite the best Chinese efforts to exit from the agrarian crisis and increase of wheat culture in the country, the problem is quite acute. At stake are lives of million people, who may still believe, that the state will find a way out of this situation. Huge losses of grain crops, chemical wheat treatment and other agricultural problems lead to panic not only residents, but also representatives of other countries.